California Briefing / Los Angeles

Execs enter pleas in fraud case

The owner of a security firm and two vice presidents pleaded not guilty Friday to charges of defrauding the state of $9 million in an elaborate workers' compensation scheme.

Ousama Karawia, 45, owner and president of International Protective Services Inc., and Vice Presidents Larry Finley, 42, and Allan Terrill Bailey, 39, have been charged with one count each of conspiracy and multiple counts of workers' compensation premium fraud and insurance fraud, according to the Los Angeles County district attorney's office.

Karawia has also been charged with five counts of possessing unregistered assault weapons, said Jane Robison, a spokeswoman for the office.

The men created a shell company, International Armored Solutions Inc., to hide the true number of employees at the security firm to avoid paying higher workers' comp premiums to the State Compensation Insurance Fund, Robison said.

Authorities said Karawia told state officials that he employed about 20 workers at the new company and that it was not part of the main security firm. The company failed to pay $9.5 million in workers' comp premiums for its 1,500 employees, prosecutors said.

The men were taken into custody Wednesday on suspicion of fraud, prosecutors said.